Republic of the Philippines

HOUSE OF REPRESENTATIVES July 5, 2021

Quezon City
10:15 am
EIGHTEENTH CONGRESS
Third Regular Session

9775
HOUSE BILL NO. __________

Introduced by: Hon. Shirlyn L. Bañas-Nograles

EXPLANATORY NOTE

Despite the country’s mineral endowment, the contribution of the mining industry to the
Philippine economy is low at 1% of the country’s GDP. Moreover, in terms of employment
generation, the industry also falls short in this aspect with only 234,000 jobs in 2015 as listed
by the MGB, equivalent to 0.6% of the total employment of the country in the same year.

Thus, to address such shortfall of the industry’s socioeconomic contributions, there is a need
to reorient its direction towards industrialization, beginning with mineral resources that are
abundant and primarily exported as raw ores, such as nickel laterite, and iron in the form of
black sand/magnetite concentrate. These resources are the main raw materials for ironmaking
and steelmaking, products of which are considered important, multi-functional, and adaptable
of materials with great array of applicability such as in construction, transportation, energy,
appliances, and packaging, among others.

As such, this bill proposes gradual/partial restriction of export of these direct shipping ores as
its mechanism to start and drive the mining industry to compel into mineral processing, value-
adding and establishing of downstream industries, which are sure means to let the mining
industry to be a significant economic contributor, while ensuring the preparedness of mining
companies to respond to such call.

In essence, the bill seeks not only to increase the mining industry’s GDP contribution but also
to increase employment and other benefits, both directly and indirectly, that accrue from
processing and manufacturing with minerals and metals.

Approval of this bill is earnestly sought.

SHIRLYN L. BAÑAS-NOGRALES
1st District, South Cotabato & General Santos City
 Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Third Regular Session

9775
HOUSE BILL NO. __________

Introduced by: Rep. Shirlyn L. Bañas-Nograles

AN ACT
ON PROMOTING THE DEVELOPMENT OF MINERALS PROCESSING AND
VALUE-ADDING AND IN THE PROCESS GRADUALLY/PARTIALLY
RESTRICTING THE DIRECT SHIPPING OF NICKEL LATERITE ORES,
MAGNETITE SANDS/IRON CONCENTRATES AND OTHER RAW METALLIC
ORES AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Title. – This Act shall be known as the “PROMOTION OF MINERAL

PROCESSING AND VALUE-ADDING ACT”.

SECTION 2. Declaration of Principles. –

a. All mineral resources in public and private lands within the territory and
exclusive economic zone of the Republic of the Philippines are owned by the
State. It shall be the responsibility of the State to promote their rational
exploration, development, utilization and conservation through the combined
efforts of government and the private sector in order to enhance national growth
in a way that effectively safeguards the environment and protect the rights of
affected communities.

b. The State must ensure that the Filipino people benefit extensively from its
mineral resources, and therefore, it shall encourage mineral processing, value-
adding, and development of downstream industries to maximize the mining
industry’s economic contributions and to pave way for the generation of more
jobs.

SECTION 3. Definition of Terms. –

a. Black Sand or Magnetite Sand” refers to beach, river, onshore, nearshore, and
offshore sands containing high concentration of magnetite, an iron oxide, which
results from the weathering and erosion of metamorphic and igneous rocks.

b. “Contractor” means a Qualified Person acting alone or in consortium who is a

party to a Mineral Agreement or FTAA.
 c. “Direct Shipping Ore (DSO)” refers to the bulk raw ore product of mining
operations that are shipped out or exported from any mining site in the
Philippines to any foreign country.

d. “Downstream Industries” refer to industrial firms that process the output of

other firms into a finished or different product.

e. “Financial or Technical Assistance Agreement (FTAA)” means a contract

involving financial or technical assistance for large-scale exploration,
development, and utilization of mineral resources.

f. “Government” means the Government of the Republic of the Philippines.

g. “Gradual or Partial Restriction” refers to the plan of the Government to

gradually or partially restrict direct shipping of ores to any foreign country and
encourage domestic processing and value-adding of these ores.

h. “Gross Output” means the actual market value of minerals or mineral products
or of bullion from each mine or mineral land operated as a separate entity,
without any deduction for mining, processing, refining(including all expenses
incurred to prepare the said minerals or mineral products in a marketable state),
as well as transporting, handling, marketing or any other expenses: Provided,
That if the minerals or minerals products are sold or consigned abroad by the
lessee or owner of the mine under C.I.F terms, the actual cost of ocean freight
and insurance shall be deducted: Provided, however, That in the case of mineral
concentrate ,not traded in commodity exchanges in the Philippines or abroad,
such as copper concentrate, the actual market value shall be the world price
quotations of the refined mineral products content thereof prevailing in the said
commodity exchanges, after deducting the smelting, refining, and other charges
incurred in the process of converting mineral concentrates into refined metals
traded in those commodity exchanges. 1

i. “Laterites” refer to a type of soil, rich in nickel, iron, aluminum, or magnesium

that formed through prolonged chemical and mechanical weathering in wet,
warm, tropical environments.2

j. “Magnetite concentrate” refers to the magnetic portion of a magnetite sand

produced by magnetic separation and/or gravity concentration, or other similar
means.

1Minor revision as per Revenue Regulations No. 1 – 2018. Providing for the Revised Tax Rates on Mineral
Products pursuant to the Provisions of Republic Act No. 10963, otherwise known as the Tax Reform for
Acceleration and Inclusion (TRAIN) Law” Amending for the purpose Revenue Regulations No. 13-94

2Ashcroft, Greg. Nickel Laterites: The World’s Largest Source of Nickel. Geology for Investors. June 12, 2014.
Retrieved from: https://www.geologyforinvestors.com/nickel-laterites/
 k. “Minerals” refers to all naturally occurring inorganic substance in solid, gas,
liquid, or any intermediate state excluding energy materials such as coal,
petroleum, natural gas, radioactive materials, and geothermal energy.

l. “Mineral Agreement” means a contract between the Government and a

Contractor, involving Mineral Production-Sharing Agreement, Co-Production
Agreement, or Joint-Venture Agreement.

m. “Mineral Processing” means the milling, beneficiation, leaching, smelting,

cyanidation, calcination or upgrading of ores, minerals, rocks, mill tailings,
mine waste and/or other metallurgical by-products or by similar means to
convert the same into marketable product.

n. “Mineral Processing Permit” refers to the permit granted to a Qualified Person

for mineral processing.

o. “Mineral Products” mean materials derived from ores, minerals and/or rocks
and prepared into a marketable state by mineral processing.

p. “Mining Operations" mean mining activities involving exploration, feasibility,

development, utilization, and processing.

q. “Ore" means naturally occurring substance or material from which a mineral or

element can be mined and/or processed for profit.

r. “State" means the Republic of the Philippines.

s. “Value-adding” refers to any economic, environmental, or social benefit that

results from further processing and manufacturing of minerals and metals. 3

CHAPTER II
SCOPE AND APPLICATION

SECTION 4. Coverage.. – This Act shall apply to the following:

a. New Mineral Agreements and Financial or Technical Assistance Agreements

(FTAAs) covering large-scale mineral mining operations that shall be entered
into after the effectivity of this Act; and
b. Existing Mineral Agreements and FTAAs where such agreements provide that
any terms and conditions resulting from repeal or amendment of any existing
laws or regulation or from the enactment of a law, regulation or administrative
order shall be considered as part of said agreements.

3 From Mineral Resources to Manufactured Products: Towards a Value-Added Mineral and Metal Strategy for
Canada. Minister of Public Works and Government Services Canada – 1998. Retrieved from
https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/mineralsmetals/pdf/mms-smm/poli-poli/pdf/val-eng.pdf
 SECTION 5. Mineral Processing – Mineral processing shall be governed by pertinent
provisions of Republic Act (RA) No. 7942, otherwise known as the “Philippine Mining Act of
1995”, and its Implementing Rules and Regulations, as amended.

Contractors that do not intend to put up processing plants shall, at all times during the
existence of their mineral agreement, have an existing and valid contract with a legitimate
mineral processing plant for the processing of mineral ores mined under the mineral agreement,
or they may form consortiums to set-up common mineral processing facilities to process their
minerals: Provided, That they shall secure a Mineral Processing Permit (MPP) within six (6)
months from the effectivity of this Act. Otherwise, such contractors shall eventually be banned
to export their raw ores in accordance with Section 8.a of this Act.

SECTION 6. Applicable Minerals. – For purposes of this Act, raw nickel laterite ores,
magnetite sands/iron concentrates, and other raw metallic ores shall be gradually/partially
restricted for export and shall undergo domestic mineral processing and value-adding for the
production of mineral products such as refined nickel/cobalt metals, ferroalloys, pig iron or
steel ingots for export and domestic consumption.

Mineral processing and value-adding shall also be required for these minerals before the entity
can avail of the incentives under Chapter 3 of this Act.

CHAPTER III
INCENTIVES

SECTION 7. Incentives. – Individuals, partnerships, cooperatives, corporations, or

other entities engaged in mineral processing shall be entitled to the incentives provided for
under Chapter XVI of RA No. 7942, including those incentives under Executive Order No.
226, for pollution control devices, income tax-carry forward of losses, income tax-accelerated
depreciation, and investment guarantees.

Individuals, partnerships, cooperatives, corporations, or other entities engaged in

mineral processing shall be entitled to additional incentives if they can generate their own
electricity through renewable energy: Provided, That it shall comply with the provisions of RA
No. 9513, otherwise known as the “Renewable Energy Act of 2008”, and its Implementing
Rules and Regulations.

CHAPTER IV
GRADUAL/PARTIAL RESTRICTION OF ORE EXPORT

SECTION 8. Gradual/Partial Restriction of Ore Export. – Mineral processing for raw

nickel laterite ores, magnetite sands/iron concentrates, and other raw metallic ores shall be
prioritized. For this purpose, all entities engaged in direct shipping of nickel laterite ores,
magnetite sands/iron concentrates, and other raw metallic ores shall gradually reduce their
export of the said mineral products on either of the schemes listed below after the transition
period provided under Section 9 of this Act.

a. Diminishing Export – In the case where a contractor’s output is solely for export,
gradual/partial restriction of exported ore shall be imposed and shall be computed
based on 50% of the gross output from the previous year until zero export.
 b. 50:50 Scheme – In the case where a contractor’s output is for both export and local
processing, the maximum allowable limit for export shall be 50% of the gross
output of the previous year: Provided, That, the remaining 50% of the gross output
shall be allotted for domestic processing.

It shall be unlawful for any individual, partnership, cooperative, corporation, or other

entity, to export or directly ship to any foreign country raw nickel laterite ores, magnetic
sands/iron concentrates, and other raw metallic ores extracted from any mining site in the
Philippines unless 50% of its gross output is processed locally.

SECTION 9. Transition Period. – To prepare the mining industry for the

gradual/partial restriction of direct shipping of raw nickel laterite ores, magnetite sands/iron
concentrates, and other raw metallic ores, a period of five (5) years shall be provided as
transition phase after the approval of this Act.

CHAPTER VI
MISCELLANEOUS PROVISIONS

SECTION 10. Community Development, and Safety and Environmental

Protection. – Individuals, partnerships, cooperatives, corporations, or other entities engaged
in mineral processing shall strictly comply with the pertinent provisions under Chapter X and
XI of RA No. 7942 and its Implementing Rules and Regulations, as amended, regarding
community development, and safety and environmental protection.

SECTION 11. Transitory Provision – During the transition period, contractors under
Section 4.a. of this Act shall either put up their own processing plants, form consortiums with
other contractors to establish common processing plants or forge supply contract agreement
with Mineral Processing Permit holders to process their ores. Otherwise, they will not be
permitted to export their unprocessed nickel ores or magnetite sand/concentrates in accordance
with Section 8.a of this Act.

SECTION 12. Penalty Provision. – Any person who violates any provision of this Act
shall, upon conviction, be imprisoned from six (6) years to one (1) day to twelve (12) years and
fined an amount equivalent to twice the value of the seized mineral ores. In addition, the cargo
containing the mineral ores shall be confiscated in favor of the State. If the offender is a
corporation, association, partnership or any juridical person, the penalty shall be imposed upon
the responsible officers, as the case may be, who participated in the commission of the offense.
If the offender is an alien, he shall, in addition to the penalty herein prescribed, be deported
without further proceedings after serving the prescribed penalties.

SECTION 13. Implementing Rules and Regulations. – Within three (3) months from
the effectivity of this Act, the Department of Environment and Natural Resources and the
Department of Trade and Industry shall promulgate the necessary rules and regulations for the
effective implementation of this Act. Such rules and regulations shall take effect upon its
publication in two (2) newspapers of general circulation.
 SECTION 14. Separability Clause. – If, for any reason, any provisions of this Act is
declared to be unconstitutional or invalid, the other sections or provisions thereof which are
not affected thereby shall continue to be in full force and effect.

SECTION 15. Repealing Clause. – All laws, decrees, executive orders, rules and
regulations, and other issuances or parts thereof which are inconsistent with this Act are
hereby repealed, amended or modified accordingly.

SECTION 16. Effectivity. – This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,